Trade secrets: Whistleblower protection not a priority

Constance Le Grip is the European Parliament's rapporteur on Trade Secrets. [European Parliament]

The Trade Secrets Directive is out of the starting blocks, but the creation of a protected ‘whistleblower’ status may take some time. EURACTIV France reports.

Trade secrets will now share a common definition and common protections across all 28 EU member states. MEPs adopted the Trade Secrets Directive by a large majority in Strasbourg this Thursday (14 April).

Under this directive, all European companies will enjoy the same level of protection against corporate espionage. Constance Le Grip, a French Republican MEP (EPP group) and the Parliament’s trade secrets rapporteur, said that in voting to protect business secrets, MEPs had decided “to protect our innovation, to defend our European competitiveness”.

No protection for whistleblowers

But the potential consequences of this bill on the freedom of information have raised a certain amount of controversy, particularly surrounding the question of whistleblowers that act in the public interest by exposing malpractice.

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Despite the significant strengthening of protections during the negotiation process, the directive still does not do enough to safeguard whistleblowers, according to European trade unions and NGOs. This view is shared by a number of MEPs, particularly members of the Greens/EFA group, who tried, unsuccessfully, to have the vote suspended.

“Amid the Panama Papers scandal, our most urgent concern should not be to protect trade secrets, but whistleblowers. That is why the Greens demand that this vote be delayed until something has been done to protect those that have the courage to speak up, in the face of prosecution and pressure, in the public interest,” said Pascal Durand, a French Green MEP.

For Durand, the major criticism of the text hinges on “the inversion of the burden of proof”. Under the new directive, it is the responsibility of the whistleblower themselves to prove that any revelations they make are in the public interest, and are not commercially motivated. This would place anyone who leaks such information in a highly risky position, both legally and financially.

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While the directive may not go far enough in this regard, it is “the first time that a specific protection for whistleblowers has been written into European law,” said Virginie Rozière, a French Radical Left MEP (S&D group).

“The Trade Secrets Directive cannot respond to all the questions on the legal definition of whistleblowers, that is not its objective. We need a separate text, which we are currently negotiating with the European Commission,” said Rozière.

But the European executive appears reluctant to act on the issue. “We held discussions with the Commission all week and we were not far from obtaining a written commitment on a specific law to protect whistleblowers,” Rozière added.

 A “Whistleblowers Directive”?

For the executive, the question of a specific directive on this issue is a delicate one. “The Commission recognises the importance of protecting whistleblowers,” a spokesperson told EURACTIV.

But so far, the apparent lack of appetite for such a protective framework among the member states has not encouraged Brussels to start working on a proposal. The question of protecting whistleblowers is complicated by the fact that it overlaps a number of exclusive (competition, environment, internal market) and some shared EU competences (taxation).

Perspectives on Trade Secrets in Europe

Know-how or confidential business information (trade secrets) are important for the competitiveness of European businesses. These intangible assets are fundamental to their innovation and research efforts. Their adequate and harmonised protection across Europe therefore represents an invaluable factor for growth and jobs.

For a European law to protect whistleblowers in all these fields, it would have to be unanimously accepted by the member states.

“We have asked the Commission to legislate on the protection of whistleblowers in the areas of exclusive competence. But the response so far has not be satisfactory,” said Rozière.

Piecemeal protection

In the absence of a specific bill in the immediate future, Brussels could work on a more piecemeal system of protection for whistleblowers, perhaps as part of the negotiations on the European Public Prosecutor’s Office.

“The Commission will try to guarantee that whistleblowers who expose suspected cases of fraud or corruption to the European Public Prosecutor will receive all the necessary protection,” a Commission spokesperson said.

In November 2013, the European Commission proposed a directive giving a common definition of what constitutes a business secret. This directive also provides the framework for victims of business secret theft to claim reparations.

The theft of business secrets is an increasingly widespread problem in the EU. In 2013, one in four European companies was the victim of at least one case of information theft (compared to 18% in 2012).

SMEs and start-ups tend to depend more heavily on confidentiality than large businesses, as do companies that deal in knowledge capital (expertise, R&D and creative products).

Differences in national legislation and the absence of a European definition of business secrets means levels of protection vary considerably from one EU member state to another.

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